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EFFECT OF THE ENERGY CRISIS ON EMPLOYMENT

An analysis of the employment slowdown during the period of the energy crisis, November 1973 to March 1974, utilized four different criteria for measurement: (1) the payroll survey of the Current Employment Statistics program; (2) an analysis of monthly employment estimates from the payroll survey; (3) labor turnover data for manufacturing; and (4) unemployment estimates from the Current Population Survey of households. Effects of the energy crisis were separated into four categories: (1) direct effects; (2) negative indirect effects; (3) positive indirect effects; and (4) tertiary effects. The industries most affected directly were the gasoline stations and the automobile manufacturing industries. As for characteristics of workers, the increase in the unemployed was not concentrated among primary family breadwinners. Also, the unemployment pickup was concentrated in those who had lost their jobs, and not those who had left voluntarily. In regard to the business cycle, a comparison between the employment slowdown of this period and that of other similar periods showed that the increase in unemployment was due mostly to the energy shortage. The employment decline during this crisis was smaller than that of the other major slowdowns and was concentrated in only a few industries. The deceleration of employment occurring several months ahead of time that was characteristic of other slowdowns was absent in the energy crisis. Taking everything into consideration, the slowdown of the energy crisis was mild in comparison to other slowdowns. However, since recovery after the lifting of the oil embargo has not been as rapid as would have been expected, it is proposed that the economy could possibly have been facing a small slowdown of its own, and that the energy crisis acted as a catalyst, greatly compounding the rise in unemployment.